Twitter Inc: TWTR Stock Sank 6% on Friday…This Is Good News

By Mukta Samtani BMS, MBA, PhD. Published : October 17, 2016

It’s Time For Twitter Inc To Redefine Itself

Twitter Inc (NYSE:TWTR) stock sank about six percent in the last trading session but recovered later to close at $16.88, posting a loss of about five percent. This was because Salesforce.com, Inc. (NYSE:CRM) CEO Marc Benioff stated clearly that Salesforce.com would not be bidding for Twitter. Hence, it looks like Twitter stock has no more upside left, at least in the short term.

Now let’s move on to why this is good news. With all the buyout rumors behind it, Twitter can now focus on what it needs to do. The social media company offers a unique platform to its users and is unparalleled in its coverage of events in real time. This is the medium that celebrities and politicians use to broadcast their opinions. This is what made the Twitter initial public offering (IPO) so successful when TWTR stock ended its first trading day at $44.94.

Twitter CEO Jack Dorsey recently described the company as a “people’s news network.” This is how Twitter needs to define itself. As a new-age media company, Twitter is doing the right thing by signing deals for live streaming sports events across the globe. Through this video strategy, Twitter Inc covers important events and also lets people add value with their feedback in real time. This is where the company is ahead of its rivals.

Last week, Twitter also announced its deal with BuzzFeed, Inc. to stream the November 8 United States election-night coverage. This is what the BuzzFeed editor had to say: “Everyone obsessed with politics will be on Twitter…that’s where we’re all going to be on election night.” (Source: “Twitter, not Facebook, will livestream Buzzfeed’s election night coverage,” Recode, October 13, 2016.)

Twitter is a distinct platform. If only the company can understand its users better, it can devise appropriate monetization strategies. The slow growth is what has been pounding TWTR stock. Perhaps it can take a leaf out of Snap Inc’s book. Snapchat attracts advertisers because it is so clear about what its user base is and brands understand how they can profit from this opportunity.

This is what investors will be looking for in the next earnings announcement. Plus, a more focused management will help bring back growth faster. If the valuation turns attractive again, then maybe a company like Walt Disney Co (NYSE:DIS) or Verizon CommunicationsInc. (NYSE:VZ) could revive their interest in Twitter. Even if this does not happen, a growing Twitter would be good news for TWTR stock.